The Securities and Exchange Commission will push for new rules to make executive pay packages easier for investors to scrutinise.
William Donaldson, chairman of the SEC, said in an interview that its existing compensation disclosure requirements often "obfuscate the total package" of executive pay and need to be changed so that investors know exactly how well senior executives are being rewarded.
Beyond better disclosure, Donaldson also said he is concerned about the performance measures adopted by some companies to reward their top executives.
In some cases, he said, executives receive bonuses simply for hitting Wall Street estimates, rather than for improving a company's long-term position.
In an interview with The Wall Street Journal, Donaldson said: "I believe that performance should be paid and good performance should receive good pay, but there has to be a better definition of what real performance is," he said.
Donaldson said he wants companies and boards to start paying closer attention to what metrics they use to determine compensation.
Donaldson also fended off recent criticism from some fellow regulators, politicians and business groups that the SEC has become too aggressive in its approach to lawmaking and enforcement.
"The SEC is not letting up at all," he said, adding he had no plans to stop imposing hefty penalties on companies and executives found guilty of wrongdoing.
However, Donaldson offered a softer approach in some areas. He said he will back moderate versions of several controversial rules, including a proposal to give investors more power to nominate directors.
He also offered a more conciliatory approach to controversial sections of the Sarbanes-Oxley act regarding financial reporting. Donaldson said that while the financial reporting rules are important he is willing to adjust them to make them "more efficient and less redundant."